State-owned Transneft said Wednesday that it might cut some oil supplies to Belarus as early as the weekend, amid stalled negotiations on tariffs and fears that Minsk may cut electricity to the Kaliningrad region.
“There are practically no more confirmed orders from the Mozyr refinery. Therefore, if the situation doesn’t change today and there are no more orders, then there will be nothing to pump by the end of the week,” Igor Demin, a spokesman for Transneft, told Interfax.
The Naftan refinery, however, has enough confirmed orders to continue supplies until the end of next week.
Moscow and Minsk are fighting over duties on imported oil that Belarus re-exports to Europe — a key source of revenue for the country’s economy. Minsk is at risk of losing $3 billion to $4 billion if Russia prevails, according to estimates by Yaroslav Romanchuk, head of the Belarussian Scientific Research Mises Center, a think tank.
Russia wants to charge Belarus the full export duty after providing a 36 percent discount last year. Under a proposal made by Moscow, the duty would affect crude that Belarussian refineries handle for re-export, while Moscow would drop the duty for 6.3 million metric tons of crude that Belarus needs for domestic consumption — a $1.8 billion windfall at the current rate.
Belarus, however, is demanding that all of the crude it imports be duty-free, citing a customs union that the two countries, along with Kazakhstan, entered into Jan. 1. Russia has said the union will only regulate the energy trade starting July 1.
Belarussian President Alexander Lukashenko sent a letter Wednesday to President Dmitry Medvedev detailing his position, his press service said, Interfax reported.
A source close to Belarussian oil refineries told the news agency that they are now refraining from signing new purchase contracts because they are waiting for an official agreement to be signed on the government level.
Bilateral talks held in Moscow came to a close Saturday without any agreement, and no further high-profile talks have been announced so far.
A total of 4.5 million metric tons of oil were scheduled to be supplied to Belarus in the first quarter of 2010, and Transneft did not say whether the schedule would be met or how much oil had been pumped so far. Last year, Moscow allowed Minsk to import 20 million metric tons of oil, of which 14.5 million metric tons Minsk re-exported to Europe.
“This is a bilateral dispute between Russia and Belarus. The European Commission expects all sides to honor the commitments both in terms of transit and oil supplies to European citizens,” said Mark Gray, a spokesman for the European Commission.
The European Union receives about 10 percent of its oil via the Druzhba pipeline, which crosses Belarus.
Germany relies on Russian crude for 15 percent of its needs, while Poland buys from Russia to fill 75 percent of its market, Andrew Neff, an analyst at IHS Global Insight in Washington, said in a note last week.
Belarus has threatened to limit electricity supplies to the Kaliningrad region, but regional Infrastructure Minister Alexander Rolbinov said Wednesday that the country would not go as far as limiting electricity supplies.
“The electricity system is not a water tap or some kind of a tube that can be cut or plugged,” he said. “If somebody tries to reduce the supplies, they will have to limit themselves, too. It is unlikely to be done.”
State electricity trade Inter RAO has been in talks with Minsk on new electricity transit rates since Tuesday, and the negotiations are due to conclude over the weekend.